GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION LAW 2019-10
SENATE BILL 162
AN ACT to modernize the loan origination fee for north carolina banks and to adjust the late payment charge for certain loans.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 24‑1.1 reads as rewritten:
(a) Except as otherwise
provided in this Chapter or other applicable law, the parties to a loan,
purchase money loan, advance, commitment for a
loan loan, or forbearance
forbearance, other than a credit card, open‑end, or similar loan
loan, may contract in writing for the payment of interest not in
excess of:of the following:
(1) Where the principal
amount is twenty‑five thousand dollars ($25,000) or less, the rate set
under subsection (c) of this
(2) Any rate agreed upon by the parties where the principal amount is more than twenty‑five thousand dollars ($25,000).
(b) As used in this section,
interest shall not be deemed in excess of the rates provided where interest is
computed monthly on the outstanding principal balance and is collected not more
than 31 days in advance of its due date. Nothing in this section
construed to authorize authorizes the charging of interest on
committed funds prior to the disbursement of said the funds.
(c) On the fifteenth day of
each month, the Commissioner of Banks shall announce and publish the maximum
rate of interest permitted by subdivision (1) of subsection (a) of this section
on that date.
Such The rate shall be the latest published
noncompetitive rate for U.S. Treasury bills with a six‑month maturity as
of the fifteenth day of the month plus six percent (6%), rounded upward or
downward, as the case may be, to the nearest one‑half of one percent (1/2
of 1%) or sixteen percent (16%), whichever is greater. If there is no nearest
one‑half of one percent (1/2 of 1%), the Commissioner shall round
downward to the lower one‑half of one percent (1/2 of 1%). The rate so
announced shall be the maximum rate permitted for the term of loans made under
this section during the following calendar month when the parties to such the
loans have agreed that the rate of interest to be charged by the lender and
paid by the borrower shall not vary or be adjusted during the term of the loan.
The parties to a loan made under this section may agree to a rate of interest which
that shall vary or be adjusted during the term of the loan in which
case the maximum rate of interest permitted on such the loans
during a month during the term of the loan shall be the greater of the rate announced
by the Commissioner in (i) the preceding calendar month or (ii) the calendar
month preceding that in which the rate is varied or adjusted.
(d) Any bank or savings
institution organized under the law of North Carolina or of the United States
may charge a party to a loan or extension of credit governed by this section a
fee for the modification, renewal, extension, or amendment of any terms of the
loan or extension of
credit, such fee not to credit. The fee shall
not exceed the greater of one‑quarter of one percent (1/4 of 1%) of
the balance outstanding at the time of the modification, renewal, extension, or
amendment of terms, or fifty dollars ($50.00).
(e) Any bank or savings
institution organized under the law of North Carolina or of the United States
may charge a party to a loan or extension of credit not secured by real
property governed by this section an origination fee
not to exceed the greater
of one‑quarter of one percent (1/4 of 1%)
of the outstanding balance or fifty dollars ($50.00).as follows:
(1) For a loan or extension of credit with a principal amount of one hundred thousand dollars ($100,000) or greater, the maximum origination fee is one quarter of one percent (1/4 of 1%) of the principal amount.
(2) For a loan or extension of credit with a principal amount less than one hundred thousand dollars ($100,000), the origination fee shall not exceed the amounts in the following table:
Principal Amount Maximum Origination Fee
$0 to $1,499.99 $100.00
$1,500 to $19,999.99 $150.00
$20,000 to $29,999.99 $175.00
$30,000 to $49,999.99 $200.00
$50,000 to $99,999.99 $250.00
(3) If (i) the loan or extension of credit has a principal amount less than five thousand dollars ($5,000), (ii) the borrower is a natural person, and (iii) the debt is incurred primarily for personal, family, or household purposes, the loan or extension of credit shall not have an annual percentage rate that exceeds thirty‑six percent (36%), inclusive of the origination fees permitted by this subsection and the interest permitted by subsection (c) of this section. For purposes of this subsection, "annual percentage rate" shall be calculated in accordance with the federal Consumer Credit Protection Act, Chapter 41 of Title 15 of the United States Code, (Truth in Lending Act) and the regulations adopted under it.
(f) This section
not be construed to does not limit fees on loans or extensions of
credit in excess of three hundred thousand dollars ($300,000)."
SECTION 2. G.S. 24‑10.1 reads as rewritten:
"§ 24‑10.1. Late fees.
(a) Subject to the
limitations contained in subsection (b) of this section, any lender may charge
a party to a loan or extension of credit governed by
the provisions of G.S. 24‑1.1
or G.S. 24‑1.1A a late payment charge as agreed upon by the parties
in the loan contract.
No lender may charge
a late payment charge:All of the following limitations apply to a late
In excess of four
percent (4%) of the amount of the payment past due; orA late payment
charge shall not exceed any of the following:
a. The amount disclosed with particularity to the borrower pursuant to the federal Consumer Credit Protection Act, Chapter 41 of Title 15 of the United States Code, (Truth in Lending Act) and the regulations adopted under it, if that act applies to the transaction.
b. For a loan or extension of credit that meets all of the following conditions, the greater of thirty‑five dollars ($35.00) or four percent (4%) of the amount of the payment past due:
1. The loan or extension of credit is made by a bank or savings institution organized under the law of North Carolina or of the United States.
2. The loan or extension of credit is not secured by real property.
3. The loan or extension of credit is governed by G.S. 24‑1.1.
4. The loan or extension of credit has an original principal balance greater than or equal to one thousand five hundred dollars ($1,500).
c. For any other type of loan or extension of credit governed by G.S. 24‑1.1 or G.S. 24‑1.1A, four percent (4%) of the amount of the payment past due.
(2) In excess of the amount disclosed with
particularity to the borrower pursuant to the provisions of the Federal
Consumer Credit Protection Act if the transaction is one to which the
provisions of that act apply, which in no event shall exceed four percent (4%);
For any payment unless
past due for 15 days or more; provided, however, if the loan is one on which
interest on each installment is paid in advance, no late payment charge may be
charged until the payment is 30 days past due or more; orA late payment
charge shall not be charged unless one of the following is true:
a. The payment is 30 days past due or more for a loan on which interest on each installment is paid in advance.
b. The payment is 15 days past due or more for any other loan.
More A late
payment charge shall not be charged more than once with respect to a single
late payment. If a late payment charge is deducted from a payment made on the
contract and such the deduction results in a subsequent default
on a subsequent payment, no late payment charge may shall be
imposed for such the default. If a late payment charge has been
once imposed with respect to a particular late payment, no such late
payment charge shall be imposed with respect to any future payment which
that would have been timely and sufficient but for the previous default;
provided that default. However, when a borrower fails to make an
installment payment, and the terms of the loan agreement provide that
subsequent payments shall first be applied to the past due balance, and the
borrower resumes making installment payments but has not paid all past due installments,
then the lender may enforce the contract according to its terms, imposing a
separate late payment charge for each installment that becomes due until the
default is cured; orcured.
On A late
payment charge shall not be charged on any loan which that by
its terms calls for repayment of the entire balance in a single payment and not
for installments of interest or principal and interest; orinterest.
Unless A late
payment charge shall not be charged unless the lender notifies the borrower
within 45 days following the date the payment was due that a late payment
charge has been imposed for a particular late payment which late payment must
be paid unless the borrower can show that the installment was paid in full and
on time. No late payment charge may shall be collected from any
borrower if the borrower informs the lender that non‑payment of an
installment is in dispute and presents proof of payment within 45 days of
receipt of the lender's notice of the late charge.
(c) The provisions of this subsection
apply only to home loans made by lenders described in G.S. 24‑1.1A(a)(2).
Notwithstanding that the note or other loan document sets forth a late payment
charge in excess of that permitted in this section, the loan
shall not be
deemed to be is not unlawful if:if all of the following
(1) No late fee in excess of
those permitted in this section has been assessed or collected by the
(2) One of the following is true:
a. If the loan is executed
on or after July 14, 1993, the lender provides written notice to the borrower
within 90 days of the date of execution of the loan documents that the late
payment charge with respect to the loan shall be four percent (4%) or
b. If the loan was executed prior to July 14, 1993, the lender provides written notice to the borrower within six months of that date that the late payment charge with respect to the loan shall be four percent (4%) or less."
SECTION 3. This act is effective when it becomes law, and applies to contracts entered into, renewed, or modified on or after that date.
In the General Assembly read three times and ratified this the 27th day of March, 2019.
s/ Daniel J. Forest
President of the Senate
s/ Tim Moore
Speaker of the House of Representatives
s/ Roy Cooper
Approved 2:49 p.m. this 1st day of April, 2019